Prestige Consumer Healthcare Inc. 2027 Q1 Earnings Call

Ron? Thanks, Phil. Thanks to everyone for joining us on a busy earnings day.

While we are just at the start of our fiscal year, we've completed two acquisitions that are now positioned for long-term success, and we'll walk through both of them shortly. Our business exceeded sales and earning expectations in the first quarter, a testament to our long-term brand-building strategy and the strength of our diversified portfolio. We also delivered record adjusted free cash flow, providing additional flexibility for disciplined capital allocation moving forward. With that, let's begin with our first quarter highlights on slide four. Sales of approximately $266 million increased 6.5%, reflecting broad-based strengths across the portfolio.

Growth was led by GI, where Dramamine and Fleet continued to deliver long-term consumption gains as well as strong performance in skincare led by Compound W. TheraTears and Debrox also posted solid growth, helping offset Clear Eyes sales that were below our expectations. Results also benefited from retailer order timing, which Chris will discuss in more detail. The quarter also included approximately $6 million of revenue from the Breathe Right portfolio acquisition. Our strong top-line performance translated into solid earnings and free cash flow. Gross margin was largely in line with expectations and adjusted EPS increased to $0.98. Adjusted free cash flow reached a quarterly record of $83.7 million, further supporting our ability to deploy capital in ways that enhance shareholder value. One of these deployment priorities is M&A, and since our May call, we completed two acquisitions.

The Breathe Right portfolio closed on June 12th, and the acquisition of LaCorium in Australia closed on July 1st. I'll discuss our integration progress and the strategic value each brings to Prestige. Our strong cash flow generation is also enabling us to invest in Pillar5, our sterile ophthalmic manufacturing facility, which will help support additional long-term eye care capacity. Now, let's turn to slide five and review the key principles supporting our expected long-term recovery of Clear Eyes. At a high level, we remain focused on the actions we believe will best support Clear Eyes and return the brand to its leadership position within the eye care category. There are three key elements to this strategy. First, we continue to invest in our recently acquired Pillar5 facility. These investments are designed to strengthen long-term supply capabilities while maintaining the high-quality standards we expect across our portfolio.

Second, a key objective for the facility is to support demand while improving supply consistency versus current levels. As we discussed in May, achieving that objective requires actions during fiscal 2027 that will continue to create some output variability in the first half of the year, as we experienced in Q1 and expect again in Q2. Looking ahead, we believe the facility is positioned for greater stability in the second half, supporting sequential improvements in eye care shipments. Third, as the historical unit share leader in eye care, Clear Eyes has unique volume requirements where we believe in-house manufacturing provides an important strategic advantage. As a result, we expect to further expand capacity at Pillar5 to fully support these long-term demand requirements and return Clear Eyes to its leading market position. Now, let's turn to slide seven and review our recent acquisitions.

We are pleased to have closed both the Breathe Right portfolio and LaCorium Health acquisitions. Each transaction brings distinct strengths that we believe will enhance our business over the long term. Starting with Breathe Right, the portfolio is expected to generate approximately $200 million in annual revenue. The majority comes from the flagship Breathe Right brand, where we see multiple opportunities for long-term growth that I'll discuss in a moment. The business also brings a strong financial profile, with growth and EBITDA margins that are accretive to Prestige. In addition, it supports our long-term sales and earnings growth algorithm while generating tax benefits that enhance future free cash flow. Less than 60 days after closing, we have successfully completed all major integration milestones.

As of this week, the business is largely integrated into our operations, running through our systems and our warehouse network, with retailers ordering Breathe Right along with our existing brands. Turning to LaCorium Health, the business is expected to contribute approximately $40 million in annualized revenue, with the majority generated in Australia. Its Dermal Therapy brand holds a leading position in therapeutic skincare categories, including eczema and cold sore treatments. We believe the brand is well-positioned for continued growth and will support the organic growth objectives of our international segment. In July, we welcomed LaCorium's employees into our Care Pharma office, making for a seamless transition given they were already located in the same building outside Sydney, Australia. The broader integration effort will proceed methodically over the balance of the year.

Over time, we also expect to realize additional synergies through distributor optimization, sales integration, and other operating efficiencies that should further enhance profitability. In summary, we've added two highly strategic businesses to our portfolio. The Breathe Right integration is largely complete, while LaCorium will continue to be integrated over the coming quarters. In both cases, our focus is on establishing a strong foundation for long-term growth and value creation. Now, let's turn to slide eight and discuss how these acquisitions further strengthen our portfolio. One of Prestige's core strengths is the diversity of our portfolio. The diversity helps reduce reliance on any single brand or category while allowing us to allocate resources towards the most attractive growth opportunities and to consistently execute against our long-term growth algorithm. As shown on the right side of the slide, these acquisitions further enhance that diversification.

On a pro forma basis, our portfolio is now even more balanced across eight categories. With the addition of Breathe Right, we've created a new wellness, sleep, and other category, which is primarily comprised of Breathe Right and represents a low teens percentage of a pro forma revenue. LaCorium's Dermal Therapy brand further strengthens our skincare category, and we've also updated several category names to better reflect the consumer need states they address. Now, let's turn to slide nine and discuss the growth opportunities we see for Breathe Right. With roots dating back to the 1990s, Breathe Right is an iconic category-defining brand with consumer awareness exceeding 90%. Given that strong foundation, we see several drivers of long-term growth.

As shown on the left side of the slide, Breathe Right has successfully done this through campaigns such as Strip On. Looking ahead, we believe social media marketing initiatives can further strengthen brand engagement and drive household penetration. Second is innovation, shown in the center of the slide. At Prestige, we rely on consumer insights to identify opportunities that can meet evolving consumer needs while expanding categories. We expect Breathe Right to be no exception. Recent launches demonstrate this potential. Breathe Right Menthol, introduced in 2025, combines improved breathing with the added benefit of an aromatic scent. Breathe Right Sport, which is launching now, expands the brand into the sports category with a sweat-resistant strip designed to help improve airflow during exercise. Finally, international expansion remains an attractive opportunity. Breathe Right is sold in more than 20 countries with a strong presence in Western Europe, Australia, and Japan.

We see opportunities to drive growth through the same marketing and innovation initiatives I just described while also benefiting from geographic expansion and long-term synergies across our global portfolio. In summary, Breathe Right is a category leader with an iconic brand, a strong foundation, and multiple avenues for sustained long-term growth. We look forward to updating you on our progress in the quarters ahead. With that, I'll turn the call over to Chris to review our financials.